I have always advocated doing everything possible to pay off credit card balances; it's good financial management and the ticket to a strong FICO credit score. But the ridiculous recent behavior of the credit card industry makes it hard for consumers to protect their FICO scores. Credit card companies are jacking up interest rates, lowering credit limits, and closing accounts—and people who have made timely payments are not exempt. So even if you pay off your balance—and that's tough when interest rates are insanely high—there's a good chance your credit limit will be slashed, and that will hurt your FICO score. Meanwhile, the recession is making it more important than ever to have a large emergency savings fund. Unemployment is closing in on 9 percent and will no doubt rise further. Even if you have a job, you could face reduced hours or benefits.

I know that feels like a no-win situation. But there is still plenty you can do to protect your family. If you are worried about job security and do not have an adequate emergency fund (ideally eight months' worth of living expenses stashed away in a federally insured bank or credit union), you need to focus more on saving money than paying down the balance on your credit cards. Yes, you read that right. I know it will make a mess of your credit score, but what's most important is that you can pay your bills in case you lose your job. If the only way you can build an emergency fund is to pay the minimum due on your credit card, that is what you need to do. You can repair your credit score later, after the financial crisis is over. Right now you have to be in crisis-management mode. And cash is queen.